US Trade Ban Could Reduce Huawei’s Revenue By 10 Billion USD

Vaibhav Kapadia - Sep 12, 2019, 9:00 am IST


Since the middle of May, when US Trade Ban was imposed on Huawei, the 100-billion-USD business of the company has been hit really hard

On Friday, Huawei – the technology giant from China said that the effect of US trade ban on the company’s business would not be as much as what it feared initially, however, the curbs could lower Huawei revenue of smartphone unit by around 10 billion USD this year.

The 100-billion-USD or 7,20,00-crore business of Huawei Technologies has been affected significantly since the middle of May. It’s also the time after Washington created the Entity List and put the second-largest mobile phone maker of the world in it, threatening to cut off the company’s access to crucial American technology and components.

US-trade-ban-Huawei
The 100-billion-USD or 7,20,00-crore business of Huawei Technologies has been affected significantly since the middle of May

In June when the first assessment of Huawei of the bans’ impact was made, Ren Zhengfei – the CEO and founder of Huawei said the fact that Huawei was blacklisted would hit the total revenue by thirty billion USD and leave the company with no topline growth for this year.

At a press conference where Huawei introduced new AI chips at the headquarters of the company in Shenzhen, Eric Xu – the deputy chairman claimed:

"It seems it is going to be a little less than that. But you have to wait until our results in March.”

The consumer business group of Huawei, including the mobile phones business, is working hard to develop its own operating system, to prepare for the worst situation in which Huawei is stripped of important Android apps. The deputy chairman also said that the group is currently doing "much better" than it initially feared.

He added:

"But a [sales] reduction of more than $10 billion could happen."

Thanks to patriotic purchases and promotions, the smartphone sales of Huawei in China increased rapidly by approximately a third compared to one year ago and got a high record in a three-month period since June, which helps the company to offset a slump in global shipments.

While Huawei is temporarily relieved, Washington, in August, claimed that it would extend a reprieve by ninety days permitting the company to purchase from American firms to supply current customers; however, it still adds over 40 units of Huawei to the blacklist.

The reprieve was said to be "meaningless" to the Chinese company because its employees are "fully prepared" to not only work but also live with the restrictions.

Huawei has been working on its chips so that the company can reduce the reliance on other foreign technologies. Huawei reiterated that the chips which include an AI chipset were named Ascend 910. It also mentioned that the chips served its own internal use because it did not intend to be a chip vendor.

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Huawei reiterated that the chips which include an AI chipset were named Ascend 910

Xu said:

"We are open to discussing partnerships with AI chipset development companies so there are chipsets of various kinds that could be used in Huawei products. So, positioning our chipset business as a standalone is a scenario that is not going to happen.”

Created by HiSilicon – the semiconductor unit of Huawei, the AI processor of Ascend 910 – a seven-nanometer AI chipset was based on the so-called ARM architecture for artificial intelligence model training, and its computing power is stronger than another artificial intelligence chipset all over the world.

In the early of 2019, the chip designer ARM from Britain announced that the deals between it and Huawei were being closed due to the trade ban. However, according to Xu, the fact that Huawei owns the ARMv8 license perpetually meant that the Ascend 910 AI chipset wouldn’t be affected.

According to Huawei, it couldn’t work with the chip designers from America like Synopsys or Cadence Design Systems Inc in compliance with the trade bans; however, Huawei has alternatives.

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